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IBM to acquire Wind River?

Aug 16, 2007 — by LinuxDevices Staff — from the LinuxDevices Archive — 1 views

IBM may acquire embedded software powerhouse Wind River, according to rumors originating in the blogosphere, and a statement issued by Wind River competitor Enea. Wind River stock yesterday rose about a dollar per share, or 10 percent, in advance of the rumor hitting. Wind River has denied the rumor, however.

In response to's inquiry regarding whether acquisition discussions were in progress, Wind River chief marketing officer John Bruggeman replied by email from a mobile phone, “Not that I know about.”

The rumor appears to have originated at Silicon Valley Watcher, a blog run by former FT reporter Tom Foremski. Foremski himself appears to have posted the link, although the site claims to have a team of reporters covering “business and culture of disruption.” Asked about his source for the rumor, Foremski responded via email, “It was from an old and reliable industry source in SIlicon Valley that has always provided me with accurate information in the past.”

One company that has been vocal about the rumor is Enea, which competes with Wind River in the market for telecom RTOSes (real-time operating systems). Enea CEO Johan Wall issued a statement this morning in response to the rumor, later acknowledging to LinuxDevices that blogs and Wind River's stock spike were his only sources.

In a conversation with LinuxDevices, Wall said he sees increasing interest in consolidation in the market for embedded tools and OSes. Asked if Enea is currently in acquisition talks, he replied, “I'm not able to discuss specifics. I do see increased interest from the large systems integrators, which is how I would label IBM today. If this rumor [about IBM acquiring Wind River] were true, it would be a telltale sign of consolidation in the market.”

Wall noted that IBM earlier acquired Telelogic, a Swedish vendor of model-driven development tools — tools that might mesh nicely with Wind River's tools, he suggested. “Telelogic provides software management tools capabilities, so acquiring [a company like Wind River] is the next logical step for IBM,” Wall said. “They would be able to provide a suite of tools to take customers from a blank sheet of paper to executable code. In the complex embedded market, they would cover the entire area of opportunity.”

In a statement released this morning, Wall made additional arguments about why an IBM merger with Wind River would make sense. He wrote in part, “The device software market has become an attractive strategic focus for many enterprise players. Wind River adds new dimension and growth opportunities to IBM's enterprise focus. Along with complementary technology, IBM brings its substantial consultative capability to bear in the device market. Their joint experience in the embedded Linux market is complementary and together extensible.”

Wind River has an engineering support staff of about 300, Bruggeman told LinuxDevices earlier this month. IBM's global staff numbers 350,000, including engineering teams in 170 countries, it says.

Both IBM and Wind River have been integrally involved with Eclipse, a cross-platform framework for cross-vendor tools integration. IBM originally donated Eclipse to the open source community, as part of a billion dollar investment in open source. More recently, Wind River has driven the Device Software Development Project, one of a handful of top-level Eclipse projects.

Asked about the relative marketshares of Wind River and Enea, Wall replied “Everyone agrees that Wind River is the clear leader overall. We firmly believe that we are the clear number two, as a $120 million company providing both tools and runtime software. However, in terms of marketshare, you would have to look at individual segments, such as cellphones and radio base stations. We command an overwhelming leadership in those segments.”

Enea's OSE RTOS and associated products have shipped in about 15 percent of phones ever made, Wall said, with OSE powering about half of all baseband processors in currently shipping phones. OSE's share of the market for application processor OSes in 3G phones is smaller, but “still very significant,” Wall added.

An 18-year-old company, Wind River hit its stride in the late 1990s, supplying its proprietary VxWorks RTOS and Tornado development tools to telecommunications companies building out mobile networks and Internet infrastructure. Hard hit by the telecom downturn in the early 2000s, it worked hard to diversity into other markets, including consumer electronics, aerospace and defense, automotive, and industrial. It finally embraced Linux in 2003, in response to customer demand, it said at the time.

Watch this space for additional comments from the companies involved.

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